French reinsurer SCOR has reported premium growth of 19% and an overall average price increase of +4.9% in P&C reinsurance at a “complex” and “prolonged” January 1st, 2022 renewals.
SCOR notes that 1/1 “evidence the continuing hardening of the P&C treaty reinsurance market,” driven by heightened losses from natural catastrophes, attritional inflation, and still low interest rates.
In total, the reinsurer achieved +19% premium growth, which includes a large structured transaction in Europe on a non-catastrophe-exposed, and a well-balanced portfolio. Excluding this deal, underlying growth amounted to +9.8%, which represents a year-on-year rise in premium of €371 million to roughly €4.2 billion.
The company’s Global Lines segment drove much of the premium expansion at Jan 1st, with growth of almost 21% to nearly €1.5 billion, with notable expansion in both credit & surety and marine & energy. In treaty P&C, growth of +4.9% to over €2.7 billion was achieved, driven by Europe (casualty) and motor (Ventures).
SCOR says that in terms of geography, it grew by 15% in Europe and by over 14% in fast growth markets.
During the important, January 1st, 2022, reinsurance renewals, SCOR also continued its efforts to reduce the volatility of its book. This includes effectively managing the cost of retrocession, which was expected to be high amid a reduction in capacity. SCOR states that it purchased the same amount of limits at a higher but contained cost, with the reinsurer able to access a broader pool of retro providers through successful third-party strategy.
Additionally, SCOR reduced its catastrophe exposure at Jan 1 by -7% on treaty reinsurance, and by -11% on the P&C in-force portfolio for the full year 2022.
As a result of the actions taken, the carrier says that its priced net combined ratio improves by 0.5 percentage points on a risk-adjusted basis.
At 1/1, approximately 64% of the firm’s P&C reinsurance premiums, representing 46% of its total P&C premiums, are up for renewal.
SCOR states that the generalised risk aversion trend is accompanied by a robust demand for reinsurance protection. And, looking forward to the April and mid-year renewals, SCOR expects these positive market trends to persist.
For 2022, the reinsurer has confirmed the assumptions presented at its September 2021 Investor Day, including gross written premium growth of up to 18%, and a net combined ratio trending downwards towards 95% and below.
Jean-Paul Conoscente, CEO for P&C at SCOR, commented: “In line with the forward-looking view shared during its September 2021 Investor Day, the market hardening continues into 2022. We are successfully implementing our strategy to reposition our portfolio towards value-accretive growth opportunities.
“The result allows us to expand our franchise, while taking a series of actions to reduce our exposure to climate-sensitive Cat business where rising prices did not lead to sufficient margins given the expected volatility. We expect continuing positive market trends as we head into Q2 2022, anticipating a sustained hardening in the upcoming renewals where we remain well positioned.”
Today, SCOR has also provided an update on its specialty insurance business, which is the part of the P&C re/insurance market the firm currently views as the most attractive.
In 2021, the reinsurer grew its specialty insurance segment to 26% of the P&C portfolio. Breaking it down, the firm explains that in large commercial single risk insurance, it records a gross premium growth of +18.6% and rate increases of +12.6% over the course of 2021.
While in portfolio underwriting, the company exits from U.S. Primary Wind-exposed MGAs, contributing to the overall reduction of U.S. cat exposures for SCOR’s P&C book.
